Food prices could increase up to 4 percent next year

DeKALB – Kyna Starks expects to take more trips to Save-A-Lot this summer.

The out-of-town grocery store is Starks’ go-to establishment when her budget is tight, and it is going to be tighter if a recent forecast from the U.S. Department of Agriculture holds true.

Food prices are expected to increase 3 percent to 4 percent in 2013 with meats, fresh vegetables and dairy products accounting for the biggest jump in cost. The expected price bump is coming off a year in which meat prices increased as much as 5.5 percent from 2011, while fruit and vegetable prices fell 2 percent.

Starks, who spends about $400 a month on food for herself and daughter, said summer months already are more difficult, as she cares for five children during the day. Any increase in food prices would mean giving up the rare times she goes out to eat.

“Four hundred dollars is a lot for me now,” Starks said. “I can already see the prices starting to go up with the fruits and produce.”

The looming increase is a result of the drought that plagued most of the country during the summer and is continuing in some areas. Local farmers such as Carl Heide, who raises hogs, said higher food prices that have yet to be passed on to the consumer have been absorbed by farmers.

The cost to feed the hogs has increased, Heide said, forcing him to become more selective with the animals he breeds for market. Some farmers had to trim their herds, he said, because it was too expensive to feed and raise a large number of hogs. Ham prices are expected to increase 4 percent next year.

Angelo Tsagalis, owner of Sycamore Parkway Restaurant, said increases in food prices are nothing new for those in the industry, but consecutive years of 4 percent increases are a drastic change from the 0.8 percent bump in 2010.

Instead of raising prices on the menu, Tsagalis said he has compensated for the increases by eliminating some specialty items such as certain steak and fish selections he no longer can afford to offer.

“The last resort we use is to raise prices, but if it gets to a certain point that we have to then we will,” Tsagalis said of the increase. “But people who come here aren’t looking to spend $15 or $20 for an entree.”

Raising prices is a foregone conclusion for Dale Osterle, owner of DeKalb catering company Leave It To Dale. Osterle, who has been in business for 30 years, said her food purchasing costs have increased at least 20 percent in the past eight years and she plans to adjust her prices at the beginning of the year.

She said stores such as Hy-Vee add to her challenges because they are able to buy in huge quantities to keep their costs lower for customers – a luxury she does not have.

“I have to raise my prices,” Osterle said. “Everything has jumped.”

Ruth Comer, spokeswoman for Hy-Vee, said that although increasing food costs are always a challenge, she believes it is a cyclical process that will level out over time, noting the grocery industry was coming off record-low prices on beef and pork a few years ago.

But before prices level out, customers may notice bigger numbers on price tags.

“We try to do the best we can to hold the line,” Comer said. “Ultimately, retail prices are going to reflect what we pay at wholesale.”